The Benefits of Automating Corporate Expense Management Processes

Expense Reports … Painful for Everyone Involved

It is safe to say that in general nobody likes to submit an expense report. Market research is rampant with stories about fraud within expense reports, which adds yet another headache those trying to track and control expenses. To get a sense for how traditional expense account reporting is viewed, here is a sampling of what others are saying:

• “The dreaded expense reports. Employees hate preparing them. Companies hate reviewing them. They seem to be painful for everyone involved, yet companies can’t get away from them all together.” - Fraud Files Forensic Accounting Blog
• “People in general are overwhelmed by the clerical responsibilities in their life, and that includes expense reports. The irony is that when we are on expense accounts, we tend to buy and spend much more because we think of it as someone else’s money, and that only increases the number of transactions we have to eventually account for.” - Gary Belsky, co-author of the book Why Smart People Make Big Money Mistakes – and How To Correct Them
• “The approval of an expense report is another burden that is placed upon managers and without proper policy or training, the path of least resistance is to simply approve the report and move on to other competing needs of the organization.” - Michael N. Kahaian and Raymond A. Roth, III Stout|Risius|Ross
• “Manual entry of expenses remains standard, even in companies that have automated reporting solutions in place. This manual entry situation is a reality for 80 percent of surveyed companies, where Expense data is entered after the event or trip by employees.” - Forrester Consulting
• “Applying statistics on fraud losses and expense reimbursement fraud losses to the current Expense spending, it is estimated that over $1 billion is lost each year to fraudulent expense reimbursement.” - JP Morgan

Given all of the above, it isn’t surprising that the Forrester study found managers ranking T&E as the second most difficult operating expense to control—just a single percentage point behind the category of maintenance and repairs, and as the JP Morgan study verified, Expense fraud adds up in a big way.

A Longtime Challenge: Controlling T&E Expense

Employee spending on Home office expenses, business travel and other related costs constitutes a significant portion of a company’s operating expenses. However, for most companies, the expense management process still involves manual, paper-based processes that are time consuming, inefficient, costly, and error prone.

While automated expense management solutions provide customers with the ability to reduce significantly their operational costs, streamline business processes and improve internal controls, the solution must be comprehensive, well integrated, and easy to use. 

Overcoming Tradition

Tradition and habit represent one challenge to overcome. Expense reporting has been paper based for centuries. While historians are yet to track down the very first Expense submission, the terms debits and credits can be traced back to the time of Columbus, when an accountant in Venice published a book in 1494 that among other things described the double-entry bookkeeping system in use during the Renaissance.

The paper-based expense account became engrained in business, worked reasonably well and in the era before computers, scanners, and smartphones, there was not an effective alternative. The system also worked well enough, although a penchant for padding expenses and outright fraud has been so widespread that it has entered the culture as something of a one-line joke, along the lines of “I’ll just put it on my expense account.”

Unfortunately, many companies today have not recognized the hidden costs fixed into the paper-based process. The challenges of this, really, are more social and cultural than economic. 

Bringing Order to the Second Largest Controllable Cost

Even at the CFO level, managers have generally been slow to recognize the enormous benefits and savings gained by moving to an efficient automated system. Perhaps the greatest motivator for change comes when the economy tightens and the CFO and other C-level executives look for ways to reduce costs. Cutting payroll is usually the first step, but it generally does not take long to discover the huge need for automating processes, such as Expense. This is because travel is the second largest controllable cost of most companies, yet they do not have a handle on how to efficiently control it.

Traditional Expense costs are high for a number of reasons, including:

• Travel demands are dynamic, and costs seem to only go up
• Paper-based systems defy uniform administration of policy, they become discretionary
• Paper-based systems provide poor visibility into how money is spent
• Paper-based systems are difficult to monitor for mistakes and fraud
• Paper-based systems do not support robust reporting or analytics
• Paper-based systems are labor-intensive, making them expensive to manage

Much of the above could be applied to poorly designed or Excel-based systems that lack back-end integration, analytics, and a user-friendly frontend to encourage adoption by users, and offering control to managers.

Bringing order to Expense accounting should begin with selection and deployment of a well crafted, thoroughly integrated, and easy to use automated system that can improve organizational visibility into Expenses and incorporate uniform policy administration to help ensure compliance.

Ease of use is critically important so users want to use the system because it removes the pain and time drain associated with the task of assembling expense reports. An automated system that provides real-time visibility into Expenses, enables policy enforcement across operations, and is embraced because of ease of use, can help organizations gain control of Expense spending—including reduction in losses from carelessness and fraud.

The Cost of Doing Nothing

Sticking with the old ways is a false economy. The money saved not investing in an automated system is swiftly dissipated through the typical losses of paper-based systems. This is especially true when considering solutions that are a software as a service (SaaS) deployment, which means you have none of the capital expenditures and time delays associated with actually purchasing hardware and software and managing it internally.

Business expenses are the second-largest controllable expenses for any organization. In most organizations, Expenses are an important and crucial component of business costs and can account for 20 cents of every operational dollar spent. Market research has shown that typically, a paper-based expense report costs an organization about $25 per submission to handle. The per-report handling costs go up sharply when dealing with complex policy enforcement, such as disallowing deductions for alcohol, or stipulating hotel room costs on a per city basis, or enforcing rules for when non-coach airline travel is allowed. Further monitoring effort is required when, for example, costs need to be allocated across multiple grants within the university environment or, within the private sector when expenses are allocated across offices on a per square-foot basis. As complications go up, so does the cost of administration and oversight, and so does the risk of misappropriation of funds through error or outright fraud.

Studies also point out that by Automating Expense Management:

• The average cost to process an expense report could drop by 80%
• The average time to enter an expense report shrinks more than 60%
• The average time to settle an expense claim drops more than 90%
• Companies can expect to pay 10% less through increased contract compliance

For most organizations, even a preliminary cost-benefit analysis shows that the opportunities for savings and efficiency gains by automation are substantial, even dramatic!

Fulfilling the Needs of Global Enterprise with ExpenseAnywhere?

ExpenseAnywhere? is synonymous with technological innovation. Its innovative end– to–end automated solutions transform the way companies manage their second largest controllable costs of travel and expense, supplier invoices, and purchase card transactions. 

ExpenseAnywhere? is a world-class cloud-based solution that provides a comprehensive end-to-end automation of the entire Home Office, Travel & Expense Management process for the global enterprise, is an easy-to-use comprehensive solution that addresses the complete life cycle of the expense management process. The system is “rules-based” and provides powerful and flexible business-definable workflow capabilities to implement best practices utilizing existing corporate approval and management hierarchy. The expense reports flow through the organization from employee to manager and then to accounting for approval, payment, and general ledger posting. The entire process is implemented to conform to the organization’s business practices including multiple approval levels, auditing, and receipt validation.

Robust Feature Set

A sampling of its robust feature set includes:

• End-To-End Home, Travel & Expense Report Automation. ExpenseAnywhere is an easy to use solution that gives business travelers the ability to book travel, create pre-travel authorization requests, and enter and submit expense reports for approval and payment processing. 
• Online Expense Entry and Reporting. ExpenseAnywhere provides an easy-to use expense report creation and submission. In most cases, corporate card data and receipts are automatically matched, coded and combined in the expense report. The system allows entry of additional specific supporting details, such as out of the pocket expenses and automatically computed Mileage reimbursement. Requires users to enter attendees for business entertainment with each expense being automatically validated against company specific policies. The solution has extensive audit rules built-in to minimize risk and fraud and to prevent duplicate entry of expenses. The solution supports proxies to enter expenses on-behalf of their delegates, as well as setting of alternate approvers. With the dynamic workflow engine built-in to the application, the submitted reports are automatically directed through the approval process or escalated based on corporate approval process.
• Integrated Travel Booking. ExpenseAnywhere solution provides powerful integration with various travel booking tools to provide a complete set of functionality for booking travel and managing expenses.
• Pre-Travel Approval. The ExpenseAnywhere travel authorization module totally automates the management and approval for cost of travel, to help you control spend before it occurs. Integrated with the online travel booking system, the travel authorization module automatically captures the travel booking data on flight, hotel, car, rail etc., from the integrated online booking system to populate the travel authorization request; empowers the user to add other related expenses, to capture total trip cost. Being an industry leader we take a great pride in delivering the solutions that help you manage and gain complete visibility on your spend.
• Smart Reporting- One Click Reporting. ExpenseAnywhere integration with the travel-booking tool automatically performs three-way matching that validates the travel booking data with the billed data (corporate card, ghost card, personal card etc.) and the expense receipts, to automatically create an expense report ready for submission. Making it not only inherently easy and fast for the user to create and submit reports, but also tracks book-versus-bill variances, if any.
• Smart Receipt Imaging. ExpenseAnywhere users can scan, e-mail, fax or capture images of expense receipts using mobile devices and transmit them to their Receipt Store for automatic validation and linking to their expenses.
• The OCR-based Advanced Receipt Matching and Audit Technology. Built into ExpenseAnywhere, this proprietary technology automatically validates each submitted receipt against company policies and flags any policy or non-reimbursable expenses. This technology also automatically validates the receipts against the expenses making it easier to review the receipt with the expenses.  This feature alone provides enormous savings and phenomenal ROI for reviewers in reviewing expenses and the receipts.
• Mobile Apps. The ExpenseAnywhere Mobile App frees up users from having to connect to their desktops/ laptops. ExpenseAnywhere Mobile App empowers users to completely enter and submit their expense reports from their mobile devices, including the ability to capture receipt images from anywhere at any time. With the App available for iPhone & Android, users will never miss submitting another expense or receipt. Now they can capture it, track it, and submit it, all from the convenience of their smart phone or tablets.
• Corporate Card Integration and reconciliation. ExpenseAnywhere automatically receives daily transaction data files from Corporate Card Providers (VISA, MasterCard, AMEX, etc.). Irrespective of whether the cards are Company paid (Direct bill) or employee paid, or One-card. The card charges file is automatically processed within the system and appropriate charges are forwarded to the cardholders for an easy drag and drop allocation to an expense report. The System provides complete allocation and reconciliation of all card charges with enhanced visibility and control. The solution supports appropriate allocation and reconciliation of ATM cash withdrawals on corporate cards. ExpenseAnywhere fully complies with PCI DSS for secure management of the card data and other PII data. 
• Foreign Currency Transactions. ExpenseAnywhere solution is designed to track three different currencies, the foreign currency spend, traveler reimbursement currency and the system base currency. The system automatically converts foreign currency spend into base system currency of the client and the reimbursement currency of the submitter. This feature allows reimbursement to travelers in their currency without having to convert and re-convert the amounts in to different currencies. 
• ExpenseAnywhere Pay Service. With the ExpenseAnywhere solution, cardholders can separate business charges from personal charges and the System can be configured to make direct payments to employee’s cards, as well as directly reimburse employees bank accounts for their business reimbursable expenses. Thereby, managing payments from within the application.
• Duty of Care. Duty of Care is a top priority at ExpenseAnywhere. Whether your company utilizes managed travel or un-managed travel, ExpenseAnywhere can capture your traveler’s travel destinations and assist you in ensuring your travelers’ safety, no matter where they are around the globe. Our solutions can instantly assist you in finding where your traveling employees are staying and where they are traveling to, thereby providing a huge services that Company’s need in today’s culture and environment.

Value of a Comprehensive, Well-Designed and Tightly Integrated Solution

Global Organizations can derive extensive value from ExpenseAnywhere because it is such a well-designed and robust solution. Looking at just some of the ways ExpenseAnywhere can help across a range of sizes, we find it helps organizations achieve:

• Tighter Policy Control
• Greater Visibility
• Reduced Fraud
• Enhanced Operations
• Reduced Costs
• Ease of Use
• Robust Reporting and Analytics

Tighter Policy Control

ExpenseAnywhere makes it easy to integrate your own custom policies directly into the system, which helps organizations consistently control spending up front, even before an expense is incurred. Integrating policy into the application provides an extra layer of protection—early in the process, which is exactly where when needed.

 Tighter policy control also makes for a more efficient Expense system for all parties. It takes the pain out of pre-travel authorizations and cost approvals. Policy integration is especially helpful with organizations dealing with complex travel and expense regulations, in the public as well as the private sector.

Along the way, the organization has complete control over which policies are locked down as hard policies, and under what circumstances and with what level of approval soft policies can be exceeded.

Public Sector Policy Control

ExpenseAnywhere has proven itself as it provides solutions for government organizations ranging from state to federal agencies, DOD/ DOE Contractors as well as to government entities internationally. The rules and regulations for Expense can be staggering to track and administer with paper-based systems, but can be efficiently integrated into ExpenseAnywhere deployments. For example, one state in the U.S. using our solution requires 16 layers of approval for specified travel items.

Other public sector entities (as do many private sector organizations) vary expense allowances according to length of trip and the city being visited. Some expenses are provided on a pre-travel basis, others are reimbursed. Some are handled on a per diem basis; others need to be separately tracked. A person on a long-term travel can change travel status from a policy standpoint if a short trip within the longer stay is required. FOR DOD/ DOE contractors, taxation requirements can be complex, especially when organizations are not entitled to reclaim the taxes. Amidst all of these complexities, organizations need travel expense reconciliations to match to the penny and make it easy for the traveling populace.

Private Sector Policy Control

 Within the private sector, some organizations have Expense policies that match the public sector for complexity. For example, many companies within the real estate management sector have turned to ExpenseAnywhere because it can seamlessly deal with complex policies such as allocating the cost of an airplane ticket according to the square footage of a building under their management. 

The good news is that regardless of how complex or layered your policies and regulations might be, ExpenseAnywhere was designed to accommodate them and apply them consistently across your operations.

For many organizations with global travelers, tracking tax reclamation and other related elements is important, which otherwise tantamount to lost revenue.

 Greater Visibility

Greater visibility into Expense administration is another benefit our customers value. The ability to seamlessly and consistently apply the most complex of policy sets, plus the rich reporting capabilities, gives managers the ability to see—in real time—what is happening in travel across their organization. The greater visibility also comes from how easily ExpenseAnywhere can be integrated with back-end and line of business applications such as PeopleSoft and SAP or other accounting/ ERP systems. ExpenseAnywhere has powerful analytic tools that enable managers to data mine their Expense records, giving them visibility into exactly how funds are being spent, and insight into how savings could be gained.

Reduced Fraud

Unintentional mistakes, as well as fraud, are greatly reduced with ExpenseAnywhere for a number of reasons, including the fact, that policy (hard and soft) is implemented uniformly across an organization, and the system automatically flags variances. Our Advanced Receipt Matching & Validation Technology automatically validates submitted receipts with the entered expenses as well as policies identifying non-reimbursable expenses and minimizing risk and fraud. This coupled with the fact that paperwork is replaced by electronic records and back-end integration with current and historic credit card data, all helps greatly reduce opportunities for honest mistakes as well as fraud.

One of our customers, which had a number of field reps calling on retail stores, reduced its $4 million in annual mileage reimbursement costs by 20% after taking advantage of ExpenseAnywhere integration with MapQuest. A whopping savings of about $800,000 in the first year alone!

Enhanced Operations

ExpenseAnywhere streamlines the entire Expense management process quickly and easily, resulting in substantially improved operational efficiencies, increased compliance with corporate policies, and employee satisfaction. In addition to integrating with ERP and other backend resources, ExpenseAnywhere also integrates with ITS – TripEasy, GetThere, Orbitz, and other value-added applications to provide a seamless platform.

Reduced Costs

Replacing paper-based systems with automation opens the door for significant savings from a number of points. As noted earlier, handling even a simple paper-based expense report costs about $25 per submission. Storing paper records for several years, add more costs, as does accessing them for audits or research. Of course the big cost reductions come from the ability to use ExpenseAnywhere to enforce policy, remove the pain (and errors) from users collecting (or failing to collect) receipts in the field, and the greatly enhanced ability to prevent and detect fraud. As a SaaS-based offering, organizations can swiftly and inexpensively deploy ExpenseAnywhere without the capital expenditure of purchasing software and servers, and without the operational expenditure of having to hire additional staff to look after such infrastructure.

Ease of Use

ExpenseAnywhere is popular with users, as well as managers, because its robust solution automates the entire travel and expense management processes from cost of travel authorization to reimbursement for expenses, consistent with corporate policies and business practices. Its One-Click Smart Report Ready for Submission automatically creates a user’s expense report by validating the booked itinerary data with the credit card charges and expense receipts. It also provides mobile apps so employees can take use it easily while on the road. Rather than stuffing receipts in a pocket, they can simply snap a photo of a receipt with their smart phone and e-mail it directly into their ExpenseAnywhere system so it will be ready for their One-Click Smart Report submission. Meanwhile, the major receipts, such as from airlines, hotels, and car rentals, can be automatically set for transmission to your ExpenseAnywhere, again making it easier for those out on the road. Ease of use like this yields rapid adoption and consistent use simply because it makes life so much easier for the users.

About ExpenseAnywhere

ExpenseAnywhere, headquartered in Pittsburgh, PA is a global provider of Corporate Spend Management Solutions. With offices on three continents and clients around the globe, ExpenseAnywhere provides leading edge cloud based solutions. ExpenseAnywhere products include a family of Expense Management solutions for small, medium and large global enterprises; government agencies; and Higher Ed., and InvoiceAnywhere, and PurchaseAnywhere solutions for the management of supplier invoices and Purchase card/ Pre-paid card solutions.

For more information, please call me at (856) 334-8009, or visit our website, www.ExpenseAnywhere.com.

ExpenseAnywhere is a registered trademark of ExpenseAnywhere. All other registered marks referenced in this document are the property of their respective owners.